The main sources of revenue are electronics exports, tourism and agriculture. However, the government has taken considerable steps and measures to encourage foreign investments. There are no significant barriers to foreign investment and restrictions on the repatriate of profits other than the deduction of withholding taxes. There is a relatively sophisticated legal infrastructure in place with businesses having a wide choice of structures under which to operate. Costa Rica is not subject to double tax treaties and exchange controls.
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Taxation in Costa Rica is much more simplified than that of many other countries. There are different limits of taxation depending on your income: the more you earn, the more you pay; if you earn less than the minimum amount established by Costa Rican law, you pay no taxes. The following basic information discusses some of the tax system, but you should always check current figures with your accountant.
Municipal Taxes.
The local community government charges municipal taxes to clean the streets, for public lighting and to finance the local bureaucracy. The amount charged is based on the number of meters of street frontage of your property its location, and on your Municipal Government. The amounts vary, but they are never over US$10 per month per residence.
Municipal Government Property Tax was recently moved from the central government to the Municipality, to which you pay directly 0.25% of the price of your property per year. If your house is rated at less than the ¢6,000,000.00 (six million colones) you are exempt from that tax. If you think this exemption applies to your property, your Municipality will tell you the procedure for applying.
Sales Tax
Sales tax is 13% on the amount paid for goods and for some services. The services of Lawyers, Doctors, Dentists and other independent professionals are exempt from sales tax; anything else you buy, from a candy bar to a computer or furniture is taxed. (Houses and cars require payment of a ‘transfer tax’, and that is covered elsewhere.) In some cases the sale is subject to the Simplified Regimen, used for very small businesses like your local ‘Pulperia’ or ‘Soda’. (corner store)
Transfer Taxes
You do not pay sales taxes, as such, for your house or car. Because they have to be inscribed in the National Registry, you pay a Transfer tax. In the case of real estate there is a 1.5% tax over the price registered in Hacienda (the Treasury Department) or in the National Registry. Cars are taxed at 2.5% over the retail price that is established by the Ministry of Treasury in an annual publication for that purpose.
Income Tax
All individuals who work - and any Corporations that are involved in commerce in Costa Rica - have to pay Income Tax. There is a tax scale and an amount due from the amount you earn from your employment, your professional services, and from whatever activity your Corporation performs. (There are individual exceptions depending on circumstances.)
In Costa Rica the fiscal year runs from October 1st to September 30th of each year, and each worker is required to at least file his/her tax declaration: if no income or business occurred, they have to declare that.
There is an exempt amount for the regular worker who earns less than or the exact amount that is established by law. For this year, the amounts are as follows.
Individuals:
a. Income up to ¢215,600.00 per month is exempt.
b. 10% tax is due on income in excess of ¢215,600.00 up to ¢324,100.00.
c. 15% tax is due on incomes in excess of ¢324,100.00.
Corporations:
There is no exempt amount for corporations, but they may deduct some expenses from their earnings. The tax percentage is taken from gross earnings, but that percentage is applied to net earnings. They are regulated the following way:
Corporations pay 30% tax over the annual earnings for 1 October to 30 September.
Small enterprises are Corporations whose gross earnings are under ¢28,860,000.00 (US$93,090.00) per year.
a. 10% tax on amounts up to ¢13,200,000.00 (US$42,580.00) in gross income.
b. 20% tax on amounts above ¢13,200,000.00 up to ¢28,860,000.00 (US$93,090.00) in gross income.
Individuals with lucrative activities (Liberal Professionals)
If you are self-employed because you have a professional degree, like a Doctor or a Lawyer, you will be subject to the following taxation:
a. Incomes up to ¢958,000.00 are exempt from tax.
b. 10% tax on incomes over ¢958,000.00 up to ¢1,431,000.00
c. 15% tax on incomes over ¢1,431,000.00 up to ¢2,388,000.00
d. 20% tax on incomes over ¢2,388,000.00 up to ¢4,785,000.00
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